The Effectiveness of Stock Throughput Policies
Anne C. Taylor
Vice President, Client Executive, Transportation Unit
Transportation companies would surely like to have a tool to keep them competitive by reducing their costs in order to win bids for moving stock or manufacturing stock and merchandise?
Stock throughput could be that tool. It is a single policy that covers cargo and/or stock anywhere in the world, be it on rail, boat, air or truck.
This single policy eliminates the need to purchase stand-alone cargo and inland marine policies and removes the stock/inventory from the property policy, thus freeing up capacity, reducing the use of aggregate (earthquake, flood, etc.), and eliminating any gaps in coverage in the product chain ("cradle to grave" coverage). You can take it one step further and negotiate a “joint deductible” agreement with the STP and Property insurer so that you only pays one deductible despite having two separate policies.
Stock throughput policies are all-risk and can quite often have lower deductibles than a typical property policy. They are written on an annual adjustment basis, thus reducing administration costs and the need for individual policies to be issued per shipment.
STP policies are designed to cover the repositioning of raw materials, works in progress and finished products. They can be written for a myriad of classes: manufacturers, wholesalers, distributors, etc.
Why would you want a stock throughput policy?
- It covers manufactured products, raw materials, semi-processed goods and goods returned for repair, servicing or reconditioning.
- Coverage is worldwide, including for property in custody and control of the insured, as well as for others’ property that you are expected to insure.
- Goods that are sold are insured for the selling price.
- Goods that have not been sold can be insured for the invoice cost plus the cost of freight and other charges.
- Storage coverage can include goods stored ashore or afloat.
- All risks coverage gives you coverage unless it’s specifically excluded in the policy. This transfers the burden of proof to the underwriter rather than to the insured.
- Coverage is seamless, such as it covers goods from warehouse to warehouse.
- Catastrophe risks are not excluded.
In today’s competitive market every little advantage can help you make or break your budget. Tools like these that can truly make a difference.
Trudy Lindsay, CAIB, FCIP, CRM, Vice President, Vancouver Branch